Twitter is in trouble.
In a move out of a middle school flag-football game, Microsoft selected LinkedIn to join its team. The sheer size of the transaction has reignited conversations about who will be picked next to join the super special circle of public mega-cap tech companies.
Vultures have been circling Twitter for well over a year, but the company has defied all experts who have predicted an imminent sale.
Though growth has slowed, Twitter is making ad revenue and producing valuable real-time data. Twitter’s most valuable content is produced by power-users. Politicians, authors, academics, and celebrities generate the content that drives internet traffic to Twitter. A majority of Twitter visitors are non-users. Twitter must increase the value of non-users by both boosting the number of times they visit the site and the amount of time they spend once there.
Unfortunately, despite progress, Twitter stock is performing abysmally. Twitter has undergone significant corporate restructuring but confidence is still lacking. This has all happened during a year where more tech companies have exited public markets than entered.
Despite what seems like deja-vu, one can only keep asking if Twitter is next. Wall Street gossip (which has never EVER been wrong before) says Twitter is going to sell and it is going to sell in 2017 no matter what.
“If Jack Dorsey has not made progress in a year, I think the business will be put up for sale,” said Victor Anthony of Axiom Capital Management. “If he fixes it, Twitter is an even more attractive target.”
On that note, let’s meet the lucky bachelors.
The following list was narrowed down with the help of Wall Street Twitter analysts James Cakmak of Monness, Crespi, Hardt & Co., and Victor Anthony of Axiom Capital Management.
Google (The Letter T) – more likely
Pros – Google already has significant Twitter integration. Tweets show up in Google search results and the company recently partnered with Google to sell promoted tweets alongside Google ads. Google has tried twice to succeed in social media, most recently with the failed Google+. Twitter gets Google back in the game and leaves enough to be fixed that Google could make it their own. Google makes most of its money on advertising. Twitter offers extensive real time data. Right now, Microsoft, Google, and others have access to the Twitter firehose. A Google takeover of Twitter would give the company greater control over who has access to the data and what specifically they can access.
Cons – Potential anti-trust concerns around Google’s size. According to Fortune, these seem to be somewhat unfounded. Google exists to index the information of the internet, the company is already able to index Twitter but has been slow to do so. Twitter also let its first partnership with Google for data fall through.
Private Equity (Twitter Capital Group) – possible
Pros – This is what private equity does best. Twitter would get a refocused management team and streamlined work force. Once advertising growth was back on a sustainable path, the company could easily be relaunched on the market. The marching orders would be to create a lean mean advertising machine with a focus on growing audience rather than tweeters.
Cons – Twitter might not be a great fit for PE. Anthony noted that Twitter is unprofitable and a buyout would potentially put too much pressure on increasing operating income.
Microsoft (SoftTweet) – possible
Pros – Microsoft demonstrated its hungry for data with its acquisition of LinkedIn. Twitter has tons of real time data. Much of the same justification from Google works here. Microsoft launched its own social network So.cl in 2011 with a focus on “collaborative consumption, not communication.” A revitalization effort is a thought-provoking long-shot.
Cons – Microsoft has its hands full with LinkedIn. The company has shown interest in moving into the social networking space but seems to be maintaining a focus on the office.
Telecom Player (AT&Tweet) – possible
Pros – A telecom-Twitter combo would create the potential for a strong advertising play. There is precedent for telecoms gobbling up content, added Anthony. Verizon bought AOL [Disclosure: Aol owns TechCrunch]. Verizon and AT&T are battling for Yahoo. Verizon recently announced plans for a web-TV play. Simultaneously Twitter is moving more and more towards offering real-time content.
Cons – All the major telecoms already have gigantic customer bases. Twitter is also somewhat outside the comfort zones of companies like AT&T and Verizon.
Facebook (Birdbook) – possible
Pros – Twitter would integrate well with the Facebook app portfolio. Instagram and Messenger function well separately and Twitter would likely be no different.
Cons – Facebook has already replicated many of Twitter’s most attractive features like trending and hashtags.
Amazon (Live) – less likely
Pros – Amazon could potentially connect Twitter with its media delivery services. The company launched AmazonCart in 2014 to make it easier for customers to merge their eCommerce and social media experiences.
Cons – Amazon is already squarely focused on retail, logistics, and Amazon Web Services. There might be more creativity for Amazon to exercise here but I’m not seeing it.
Apple (Twitter by Dr.Dre) – less likely
Pros – Twitter is already integrated well with iOS and MacOS. If Apple purchased Twitter, it could be a strong social media play to give the company a new market. Apple has a TON of cash to burn. The company is currently waging a war against Spotify for the mobile streaming market and hasn’t made enough headway yet.
Cons – There isn’t really a direct platform connection for Apple to leverage. Two weeks ago, I might have proposed that Apple could integrate Siri and repackage Twitter similarly to Amazon Echo. Unfortunately Apple already opened that door with the SiriKit API announced at WWDC 2016. Back in 2013, it was speculated that Apple might try to use Twitter data to improve app recommendations. Apple purchased Topsy, a Twitter analytics engine, but then let the company die.
News Corp. (@Murdoch) – less likely
Pros – Twitter might arguably be a better fit for News Corp than MySpace because of its growing presence as an information consumption platform. Ask yourself how many friends have used Twitter to organize an event in the last week and then ask yourself how many times you have heard Twitter referenced in the 2016 Presidential Campaign. The shift is real.
Cons – The company already tried to enter the social media space with MySpace and ended up selling off the company. MySpace lost 94 percent of its value between the day News Corp. purchased it and the day it unloaded it. Twitter users would generally be upset that a publisher would threaten the openness and freedom of the platform, added Cakmak.
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